UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) February 21, 2007
NORDSTROM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 001-15059 91-0515058
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION) NUMBER) IDENTIFICATION NO.)
1617 SIXTH AVENUE, SEATTLE, WASHINGTON 98101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (206) 628-2111
INAPPLICABLE
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2 below):
___ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
___ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
___ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On February 26, 2007, Nordstrom, Inc. issued an earnings release announcing
its results of operations for the quarter and year ended February 3, 2007, its
financial position as of February 3, 2007, and its cash flows for the year
ended February 3, 2007. A copy of this earnings release is attached as
Exhibit 99.1.
ITEM 5.02 Entry into a Material Definitive Agreement
(e) Named Executive Officer Compensation
On February 21, 2007 the Compensation Committee (the "Committee") of the
Board of Directors of Nordstrom, Inc. (the "Company") approved the following
executive compensation actions relative to the Company's Named Executive
Officers as set forth in the Company's proxy statement dated April 13, 2006
(the "NEOs"):
2006 2007
Named Executive Bonus Base Salary
Officer (1) (2)
-----------------------------------------------------------------------------
Blake W. Nordstrom
President $1,645,490 $700,000
Peter E. Nordstrom
EVP and President
Merchandising $1,460,843 $650,000
Erik B. Nordstrom
EVP and President
Stores $1,460,843 $650,000
Michael G. Koppel
EVP and Chief
Financial Officer $564,439 $480,000
James O'Neal
EVP and President
Nordstrom Product Group $494,526 $395,000
(1) The 2006 cash bonuses were determined based on the achievement of pre-
established performance measures set by the Committee under the shareholder
approved Nordstrom, Inc. Executive Management Group Bonus Plan.
(2) Represents Named Executive Officers' base salaries effective April 1,
2007 set by the Committee on February 21, 2007.
On February 21, 2007, the Committee also approved stock option grants to the
Company's five NEOs, effective March 1, 2007. Stock options were granted
pursuant to the terms of the Nordstrom, Inc. 2004 Equity Incentive Plan (the
"Plan"). Stock option grants have a term of ten years with an exercise price
equivalent to the fair market value of the Company's stock on March 1, 2007.
Vesting occurs at the rate of 25% annually beginning one year from the date
of grant. The number of options to be awarded to each individual is a
function of base pay, a long-term incentive (LTI) percentage and the fair
value of an option. The Binomial Lattice model is used to estimate the fair
value of an option. This model requires the input of certain assumptions,
including risk-free interest rate, volatility, dividend yield, and expected
life. The formula for determining the number of options granted is:
No. of Options = (base pay * LTI %) / option fair value
The 2007 Stock Option Award Agreement and Form of Notice is attached hereto
as Exhibit 10.1.
On February 21, 2007, the Committee also approved Performance Share Units
("PSUs") awards to the Company's five NEOs. PSUs are awarded pursuant to the
terms of the Nordstrom, Inc. 2004 Equity Incentive Plan. PSUs entitle the
participant to settle in shares of Company Common Stock or cash in lieu
thereof upon the achievement of such performance goals as may be established
by the Committee at the time of grant based on any one or combination of
certain performance criteria enumerated in the Plan. 2007-2010 PSUs are
earned over a three-year period. The percentage of PSUs granted that will
actually be earned at the end of the three-year period is based upon the
Company's total shareholder return compared to the total shareholder return
of companies in a pre-defined group of retail peers. Additionally, PSUs will
only be earned if the Company's total shareholder return for the period is
positive. The number of units to be awarded to each individual is a function
of base pay, a long-term incentive (LTI) percentage and the value of a
performance share unit (discounted to reflect the risk of forfeiture). The
formula for determining the number of units granted is:
No. of Units = (base pay * LTI %) / discounted stock price
The 2007 Performance Share Unit Award Agreement and Form of Notice is
attached hereto as Exhibit 10.2.
Also on February 21, 2007, the Committee approved bonus goals, performance
levels and award levels that may be earned during the fiscal year ending
February 2, 2008 ("Fiscal Year 2007") under the Company's shareholder
approved Executive Management Group Bonus Plan (the "Plan").
Under the Plan, bonus awards are paid only when performance goals are
achieved. The bonus target and maximum payments are expressed as a
percentage of base salary and the bonus goals vary by position depending on
each participant's area of responsibility and influence.
Fiscal Year 2007 bonus arrangements for the Company's NEOs were approved by
the Compensation Committee as follows:
Name and Bonus Target Bonus Maximum Bonus
Principal as a % of as a % of Bonus Measure
Position Base Salary Base Salary Measures Weighting
--------------------------------------------------------------------------------------
Blake W. Nordstrom 100% 250.0% -Earnings before taxes/
President Return on invested capital 100.0%
Peter E. Nordstrom 100% 250.0% -Earnings before taxes/
EVP and President Return on invested capital 100.0%
Merchandising
Erik B. Nordstrom 100% 250.0% -Earnings before taxes/
EVP and President Return on invested capital 100.0%
Stores
Michael G. Koppel 60% 150.0% -Earnings before taxes/
EVP and Chief Return on invested capital 75.0%
Financial Officer -Leadership development 12.5%
-Cost/asset productivity 12.5%
James R. O'Neal 60% 150.0% -Earnings before taxes 75.0%
EVP and President -Nordstrom Product Group
Nordstrom Product Group sales (Full-line stores
only) 12.5%
-Nordstrom Product Group
design development and
lead times 12.5%
ITEM 7.01 Regulation FD Disclosure
On February 26, 2007, Nordstrom, Inc. issued an earnings release announcing
its results of operations for the quarter and year ended February 3, 2007,
its financial position as of February 3, 2007, and its cash flows for the
year ended February 3, 2007. A copy of this earnings release is attached as
Exhibit 99.1.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 2007 Stock Option Award Agreement and Form of Notice
10.2 2007 Performance Share Unit Award Agreement and Form of Notice
99.1 Nordstrom earnings release dated February 26, 2007, relating to
the Company's results of operations for the quarter and year ended
February 3, 2007, its financial position as of February 3, 2007, and its
cash flows for the year ended February 3, 2007.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NORDSTROM, INC.
By: /s/ David L. Mackie
-----------------------
David L. Mackie
Corporate Secretary
Dated: February 26, 2007
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
10.1 2007 Stock Option Notice Award Agreement and Form of Notice
10.2 2007 Performance Share Unit Award Agreement and Form of Notice
99.1 Nordstrom earnings release dated February 26, 2007 relating to the
Company's results of operations for the quarter and year ended
February 3, 2007, its financial position as of February 3, 2007, and
its cash flows for the year ended February 3, 2007.